Bill Gates and Warren Buffett have persuaded 40 of America’s richest to donate 50 percent of their wealth to charity. CEO Middle East finds out how they did it.
The sluggish response for international aid in the wake of Pakistan’s floods was heavily criticised by charities who were left desperately trying to feed, clothe and provide medical care to the more than 17 million people who have been affected by the devastating floods.
It took nearly three weeks for the United Nations to raise 70 percent of the $460m required to provide emergency relief, with Saudi Arabia donating almost a third ($100m) of the total alone. Such figures still pale in comparison to the amount Warren Buffett and Bill Gates managed to persuade America’s richest to donate to charity the same month.
Just weeks before the floods hit, two of America’s richest men held a press conference to announce the culmination of just over a year’s worth of work. It had been less than two months since they launched The Giving Pledge, a moral commitment for America’s billionaires to give 50 percent or more of their personal fortune to charity, either during their lifetime or following their death. Just weeks later, 40 billionaires, including ‘Star Wars’ creator George Lucas, New York Mayor Michael Bloomberg and financier George Soros, had written and signed the pledge, effectively committing more than $115bn to charity.
“We’ve really just started but already we’ve had a terrific response. At its core, The Giving Pledge is about asking wealthy families to have important conversations about their wealth and how it will be used,” Buffett explained. “We’re delighted that people are doing just that – and that so many have decided to not only take this pledge but also commit to sums far greater than the 50 percent minimum level.”
So how did two of the world’s richest men persuade so many to join their cause? They might be known for their tough decisions in the boardroom but outside of work both are known for their commitment to charitable causes. Bill Gates and his wife Melinda founded the world’s largest philanthropic foundation, the Bill & Melinda Gates Foundation, in 1994 and have since donated more than $28bn. Buffett, the so-called Sage of Omaha, is just as charitable. In 2004 he said he would give 99 percent of his fortune away, much of it to the Gates’ charity.
But it wasn’t until the two men got together with the billionaire and current patriarch of the Rockefeller family, David Rockefeller, that they really started to get the ball rolling. On May 5 last year Rockefeller played host to a dinner party with a twist. Envisaged by Buffett and organised by the Gates’, each of the guests was carefully chosen not for their conversation but for their wallet. The dozen or so guests included Bloomberg, several Wall Street financiers, as well as the former boss of Cisco Systems and his wife, John and Tashia Morgridge, and the hugely successful chat show host, Oprah Winfrey.
It turned out to be no ordinary dinner. Instead of the usual dinner party chit-chat each guest was asked to talk about what philanthropy means to them and most – much to the three hosts’ delight – agreed that giving their hard-earned money away was actually a lot more fun than making it.
The dinner turned out to be the first in a series of similar dinners (one in San Francisco and another at the New York Public Library) at which the subject was the same; philanthropy. It was during one such dinner that Buffett declared the evening’s best idea had been put forward by Marguerite Lenfest, the wife of H.F Lenfest (who made more than $1.2bn when he sold his Philadelphia cable company to Comcast ten years ago) who said that everyone should sit down, decide how much money they and their children needed and then figure out what to do with the rest.
At this stage, The Great Givers, as Buffett so aptly named his new project, already had the committment of four billionaire couples. But it wasn’t until last month that the fruits of those dinners were finally made public. Those that had already pledged invited the rest of Forbes’ 400 to take part by writing a public letter promising to give away half of their wealth to charitable causes. The obligation, according to the website, is a moral commitment rather than a legal one and does not involve pooling money to support a particular set of organisations or causes.
At the time of going to press, 40 billionaires, worth a combined $230bn, had each written a public pledge. Those supporters include; fashion designer Diane von Furstenberg and her husband television mogul Barry Diller, who are thought to have a fortune of more than $1bn; the hotel heir Barron Hilton (worth $2.5bn); the Duty Free Shoppers co founder and longtime philanthropist, Charles Feeney; and the founder of eBay Pierre Omidyar.
The list also includes the so-called philanthropic “bad boy” Larry Ellison, who is famous for withdrawing a large donation from Harvard following the resignation of the university’s president. Ellison had already pledged to himself that he would give 95 percent of his fortune away to good causes but no one knew about it. After talking to Buffett and Gates he was persauded to go public with his intention. “Many years ago, I put virtually all of my assets into a trust with the intent of giving away at least 95 percent of my wealth to charitable causes. I have already given hundreds of millions of dollars to medical research and education, and I will give billions more over time,” he writes in his pledge.
“Until now, I have done this giving quietly – because I have long believed that charitable giving is a personal and private matter. So why am I going public now? Warren Buffett personally asked me to write this letter because he said I would be ‘setting an example’ and ‘influencing others’ to give. I hope he’s right.”
Like Ellison, many who have pledged say they want to set an example to their children and the rest of the world. The asset manager, philanthropist and environmentalist Tom Steyer and his wife Kat Taylor say they want to leave their “kids a different kind of inheritance, an example of at least trying to lead a worthy life”. Bloomberg also says he joined because he wanted to show his children he cared.
There are, however, some notable exceptions to Forbes 400 list. Although America’s highest paid entertainer Oprah Winfrey showed interest during The Givers first meeting she has yet to sign on the dotted line. So too have billionaire Google founders, Sergei Brin and Larry Page. Buffett claims not to have pressured those that did commit too much (“It was a very soft sell”) but hopes that the idea will change the way America looks at giving. “We’re hoping that America, which is the most generous society on Earth, becomes even more generous over time.,” he said.
“We hope that not only will that norm move toward even greater philanthropic contributions, but also smarter ones.”
Fortune magazine estimates that if each entrant on the Forbes 400 of wealthiest Americans pledges to give half their fortune away an additional $600bn would be given to charity – twice the amount Americans gave last year. It might not come soon enough for the millions of victims in Pakistan, but for the next generation it’s already looking like a brighter future.
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